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Now is the time to be thinking about getting your company’s growth engine restarted, even if the economy is still on shaky ground. Many firms in our industry have enjoyed a great season this year because they launched aggressive actions to get new business coming into their doors. Where’s the growth coming from?
Capturing market share from competitors. Aggressive companies know the best time to grab customers from their competitors is during a recession. Weakened by lower sales and fewer resources, competitors often lack a strategy for keeping their customers happy. Some exit product categories or close branch office locations, leaving entire groups of customers under-served. Others push customers away with bad service, slow response times and poor inventories.
But you can’t wait for these unhappy customers to walk in your door. You have to target them, hunt them down and get them to change. Experts say it takes five times the effort to capture a new customer than it does to maintain an existing relationship, but that process is made easier if the customer is already unhappy. Aggressive companies tactfully sell their strengths, demonstrate their ability to deliver outstanding support and share their long term vision for the future.
Diversifying into new products or services. Companies that traditionally specialized have found that broadening their offerings makes a lot of sense. The same personnel, equipment and systems can be leveraged with new lines.
Success in diversifying comes from a strategic approach rather than a casual, “I’ll give this new thing a try.” If you’re going to diversify, you better have a plan.
Many new product or service introductions fail to live up to expectations because nobody asks the tough questions up front. Who are you going to sell it to? Why will they buy it? How will you capture their business? How will you make money? How will you measure success?
I remind my clients of a simple rule of smart diversification: the new category must be able to grow to at least five percent of your company’s sales or it’s not worth considering.
Why is that important? You will need to make significant investments in advertising, customer acquisition, training, and inventory to make a new line go. It’s only worth the distraction if it can actually turn into something. Usually, the best options match well with your existing customer base and their identifiable needs. Selling completely new products to completely new customers is doubly tough!
Always do a profitability analysis before launching a new line. The more missionary work that you will need to do to establish a product, build credibility for a brand or win approval from customers, the more margin that will need to be builtin. There are always opportunity costs. Make sure you’re not working harder for a lower return.
Now is the time to grab for growth. What’s your plan?
EDITOR’S NOTE: Jeff Carowitz leads a landscape industry marketing agency. Find him on LinkedIn or at Jeff@StrategicForce Marketing.com